UNITED STATES

                  SECURITIES AND EXCHANGE COMMISSION

                       Washington,  D.C.  20549

                               FORM 10Q

Quarterly Report Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended March 31, 1997

Commission File Number: 2-88927

                      FIRST KEYSTONE CORPORATION
        (Exact name of registrant as specified in its charter)


                Pennsylvania                       23-2249083     
         (State or other jurisdiction of        (I.R.S. Employer 
          incorporation or organization)        identification No.)


111 West Front Street, Berwick, PA                    18603
(Address of principal executive offices)            (Zip Code)


Registrant's telephone number, including area code:  (717) 752-3671

   Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.

                         Yes   X     No       


   Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical date:

Common Stock, $2 Par Value, 889,147 shares as of March 31, 1997.


<PAGE>


                    PART I. - FINANCIAL INFORMATION

Item. 1  Financial Statements

<TABLE>

                      FIRST KEYSTONE CORPORATION
                            BALANCE SHEETS
                              (Unaudited)

<CAPTION>

(Amounts in thousands, except per share data)

                                                     March        December
                                                      1997          1996 
<S>                                                 <C>            <C>
ASSETS
Cash and due from banks                             $  5,703       $  5,147
Interest bearing deposits with banks                   4,870             32
Available-for-sale securities carried
    at estimated fair value                           79,842         81,146
Investment securities, held to
    maturity securities, estimated 
    fair value of $19,180 and $19,955                 19,421         20,080
Loans, net of unearned income                        137,229        133,261
Allowance for loan losses                             (2,295)        (2,267)
                                                                           
Net loans                                           $134,934       $130,994
Bank premises and equipment                            2,923          2,881
Other real estate                                         46             46
Interest receivable                                    1,953          1,959
Other assets                                             659            272
                                                                           
   Total Assets                                     $250,351       $242,557

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
   Non-interest bearing                             $ 17,852       $ 17,805
   Interest bearing                                  185,417        180,741
                                                                           
   Total deposits                                   $203,269       $198,546

Short-term borrowings                                  5,099          5,121
Long-term borrowings                                  13,000         10,000
Accrued expenses                                       1,475          1,128
Other liabilities                                         89            289
                                                                           
   Total Liabilities                                $222,932       $215,084

STOCKHOLDERS' EQUITY
Common stock, par value $2 per share                $  1,778       $  1,778
Surplus                                                6,655          6,655
Retained earnings                                     18,702         17,890
Unrealized gain (loss) on investment 
   securities available
   for sale, net of taxes                                284          1,150
                                                                           
    Total Stockholders' Equity                      $ 27,419       $ 27,473

    Total Liabilities and 
       Stockholders' Equity                         $250,351       $242,557


<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>

                                   1
<PAGE>


<TABLE>

                      FIRST KEYSTONE CORPORATION
                         STATEMENTS OF INCOME
          FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
                              (Unaudited)

<CAPTION>

(Amounts in thousands except per share data)

                                                      1997           1996
<S>                                                  <C>            <C>
INTEREST INCOME
Interest and fees on loans                            $2,986         $2,801
Interest and dividend income 
   on securities                                       1,611          1,405
Interest on deposits in banks                             11             47
                                                                           
   Total Interest Income                              $4,608         $4,253

INTEREST EXPENSE
Interest on deposits                                  $1,997         $1,955
Interest on short-term borrowings                         78             49
Interest on long-term borrowings                         162            125
                                                                           
   Total Interest Expense                             $2,237         $2,129

Net interest income                                   $2,371         $2,124
Provision for loan losses                                 50             25
                                                                           
Net Interest Income After 
   Provision for Loan Losses                          $2,321         $2,099

OTHER INCOME
Service charges on deposit accounts                   $  146         $  130
Other non-interest income                                139            109
Investment securities gains 
   (losses) net                                            6              1
                                                                           
   Total Other Income                                 $  291         $  240

OTHER EXPENSES
Salaries and employee benefits                        $  659         $  617
Net occupancy and fixed asset expense                    192            207
Other non-interest expense                               364            331
                                                                           
   Total Other Expenses                               $1,215         $1,155

Income before income taxes                            $1,397         $1,184
Applicable income tax (benefit)                          274            216
                                                                           
Net Income                                            $1,123         $  968

Net Income Per Weighted Share 
   Outstanding                                        $ 1.26         $ 1.09

<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>

                                   2
<PAGE>


<TABLE>

                      FIRST KEYSTONE CORPORATION
                       STATEMENTS OF CASH FLOWS
          FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
                              (Unaudited)

<CAPTION>

(Amounts in thousands)
                                                       1997          1996
<S>                                                   <C>          <C>
OPERATING ACTIVITIES
Net income                                            $ 1,123      $    968
Adjustments to reconcile net income
   to net cash provided by 
   operating activities:
   Provision or loan losses                                50            25
   Provision for depreciation and 
      amortization                                         77            79
   Premium amortization on investment 
      securities                                           33            47
   Discount accretion on investment 
      securities                                          (31)          (21)
   (Gain) loss on sales of investment 
      securities                                           (6)           (1)
   Deferred income tax (benefit)                           (7)           18
   (Increase) decrease in interest 
      receivable and other assets                        (201)         (181)
   Increase (decrease) in interest 
      payable, accrued expenses and 
      other liabilities                                   415           165
                                                                           
   NET CASH PROVIDED BY OPERATING 
      ACTIVITIES                                      $ 1,453      $  1,099

INVESTING ACTIVITIES
   Purchases of investment securities 
      available for sale                              $(5,778)     $(18,561)
   Proceeds from sales of investment 
      securities available for sale                     4,217         5,299
   Proceeds from maturities and 
      redemptions of investment 
      securities available for sale                     1,584         1,441
   Purchase of investment securities 
      held to maturity                                      0          (996)
   Proceeds from maturities and 
      redemption of investment 
      securities held to maturity                         638         1,029
   Proceeds from sales of loans                             0            65
   Net (increase) decrease in loans                    (3,990)          690
   Purchase of premises and equipment                    (120)          (33)
                                                                           
   NET CASH USED BY INVESTING ACTIVITIES              $(3,449)     $(11,066)

FINANCING ACTIVITIES
   Net increase (decrease) in deposits                $ 4,723      $  4,737
   Net increase (decrease) in 
      short-term borrowings                               (22)        2,696
   Net increase (decrease)in long-term 
      borrowings                                        3,000         1,000
   Cash dividends                                        (311)         (280)
                                                                           
   NET CASH PROVIDED BY FINANCING 
      ACTIVITIES                                      $ 7,390      $  8,153

INCREASE (DECREASE) IN CASH AND 
   CASH EQUIVALENT                                    $ 5,394      $ (1,814)
CASH AND CASH EQUIVALENTS, BEGINNING                    5,179         6,620
                                                                           
CASH AND CASH EQUIVALENTS, ENDING                     $10,573      $  4,806
 
SUPPLEMENTAL DISCLOSURE OF CASH 
   FLOW INFORMATION
   Cash paid during period for
     Interest                                         $ 2,183      $  2,079
     Income Taxes                                           0           102

<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>

                                   3
<PAGE>


                      FIRST KEYSTONE CORPORATION
              CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                            March 31, 1997
                              (Unaudited)


Note 1.

     The accounting and reporting policies of First Keystone
Corporation and Subsidiaries conform to generally accepted accounting
principles and to general practices within the banking industry. 
These consolidated interim financial statements include the accounts
of First Keystone Corporation and its wholly owned subsidiary, The
First National Bank of Berwick.  All significant inter-company
balances have been eliminated.


Note 2.

     The accompanying consolidated interim financial statements are
unaudited.  In management's opinion, the consolidated interim
financial statements reflect a fair presentation of the consolidated
financial position of First Keystone Corporation and Subsidiary, and
the results of their operations and their cash flows for the interim
periods presented.  Further, the consolidated interim financial
statements reflect all adjustments, which are in the opinion of
management, necessary to present fairly the consolidated financial
condition and consolidated results of operations and cash flows for
the interim period presented and that all such adjustments to the
consolidated financial statements are of a normal recurring nature.


Note 3.

     The results of operations for the three-month period ended March
31, 1997, are not necessarily indicative of the results to be expected
for the full year.


Note 4.

     Net income per share of common stock for the interim periods is
based on the weighted average number of shares outstanding for each
period; 1997 and 1996 - 889,147 shares.


Note 5.

LOANS
     Loans are stated at their outstanding principal balances, net of
any deferred fees or costs, unearned income, and the allowance for
loan losses.  Interest on installment loans is recognized as income
over the term of each loan, generally, by the "actuarial method". 
Interest on other loans is primarily recognized based upon the
principal amount outstanding.  Loan origination fees and certain
direct loan origination costs have been deferred and the net amount
amortized using the interest method over the contractual life of the
related loans as an interest yield adjustment. 

     Non-Accrual Loans - Generally, a loan (including a loan impaired
under Statement of Financial Accounting Standards No. 114) is
classified as non-accrual, and the accrual of interest on such a loan
is discontinued when the contractual payment of principal or interest
has become 90 days past due or management has serious doubts about
further collectibility of principal or interest, even though the loan
currently is performing.  A loan may remain on accrual status if it is
in the process of collection and is either guaranteed or well secured. 


                                   4

<PAGE>


When a loan is placed on non-accrual status, unpaid interest credited
to income in the current year is reversed and unpaid interest accrued
in prior years is charged against the allowance for credit losses. 
Potential problem loans are identified by management as a part of its
loan review process.

     Income recognition is in accordance with Statement of Financial
Accounting Standards No. 118.  Certain non-accrual loans may continue
to perform, that is, payments are still being received.  Generally,
the payments are applied to principal.  These loans remain under
constant scrutiny and if performance continues, interest income may be
recorded on a cash basis based on management's judgement as to
collectibility of principal.

     Allowance for Loan Losses - The allowance for loan losses is
established through provisions for loan losses charged against income. 
Loans deemed to be uncollectible are charged against the allowance for
loan losses, and subsequent recoveries, if any, are credited to the
allowance.

     The Corporation adheres to the principles provided by Statement
of Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan as amended by Statement of Financial
Accounting Standards No. 118, "Accounting by creditors for Impairment
of a Loan - Income Recognition and Disclosure."  Under these
standards, the allowance for loan losses related to loans that are
identified for evaluation in accordance with Statement No. 114 is
based on discounted cash flows using the loan's initial effective
interest rate or the fair value of the collateral for certain
collateral dependent loans.  Statement No. 118 allows the continued
use of existing methods for income recognition on impaired loans and
amends disclosure requirements to require information about the
recorded investment in certain impaired loans and related income
recognition on those loans.  The allowance for loan losses is
maintained at a level by management to be adequate to absorb estimated
potential loan losses.  Management's periodic evaluation of the
adequacy of the allowance for loan losses is based on the
Corporation's past loan experience, known and inherent risks in the
portfolio, adverse situations that may affect the borrower's ability
to repay (including the timing of future payments), the estimated
value of any underlying collateral, composition of the loan portfolio,
current economic conditions, and other relevant factors.  this
evaluation is inherently subjective as it requires material estimates,
including the amounts and timing of future cash flows expected to be
received on impaired loans that may be susceptible to significant
change.


<TABLE>
<CAPTION>

     The following table presents the changes in the allowance for
credit losses:

<S>                                                     <C>
Balance at January 1, 1997                              $2,267
Provisions charged off                                      50
Loans charged off                                          (30)
Recoveries                                                   8
                                                              
Balance at March 31, 1997                               $2,295

</TABLE>


     At March 31, 1997, the recorded investment in loans that are
considered to be impaired under Statement No. 114 was $117,087.  No
additional charge to operations is required since the total allowance
for loan losses is estimated by management to be adequate to provide
for the loan loss allowance under Statement No. 114 as well as any
other potential loan losses.


Note 6.

     On April 15, 1997, the Board of Directors declared a 10% stock
dividend payable May 16, 1997, to shareholders of record May 2, 1997. 
The stock dividend was valued based on the market price of $37.00 per
share on May 2, 1997.  A total of 88,762 shares were issued as a
result of the stock dividend with a total value of $3,289,844,
including cash in lieu of fractional shares.


                                   5

<PAGE>


<TABLE>
<CAPTION>

                                    Common         Common             
                                    Shares          Stock         Surplus

<S>                                   <C>          <C>             <C>
Balance at January 1, 1997            889,147      $1,778,294      $6,654,396

Net Income                                -             -               -    
Cash dividends - $.35
   per share                              -             -               -    
Change in unrealized gain
   (loss) on investment 
   securities available 
   for sale                               -             -               -    
                                                                             
Balance at March 31, 1997             889,147      $1,778,294      $6,654,396


<CAPTION>

                                               Net Unrealized
                                                 Gain (Loss)
                                                on Investment
                                                 Securities
                                   Retained      Available
                                   Earnings        For Sale        Total

<S>                                <C>             <C>            <C>
Balance at January 1, 1997         $17,889,923     $1,150,382     $27,472,995

Net Income                                          1,123,083
Cash dividends - $.35 
   per share                                         (311,201)
Change in unrealized gain
   (loss) on investment 
   securities available 
   for sale                                          (866,311)               
                                                                             
Balance at March 31, 1997          $18,701,805     $  284,072     $27,418,567


</TABLE>



Note 7.

     As required on January 1, 1996, the Corporation adopted Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of."  The Statement requires that
long-lived assets and certain identifiable intangibles are classified
into two categories for the purpose of accounting for an impairment of
assets:  those to be held and used and those to be disposed of. 
Assets to be held and used must be reviewed whenever events or changes
in circumstances indicate that the carrying value may not be
recoverable.  An impairment loss is indicated if the sum of the
expected future cash flows, undiscounted and without interest charges,
is less than the carrying amount of the assets.  An impairment loss
must be recognized as the amount by which the carrying amount of the
asset exceeds the fair value of the asset so determined. 
Implementation of this Statement did not have any effect on the
consolidated financial condition or results of operations of the
Corporation.


Note 8.

     The consolidated interim financial statements have been prepared
in accordance with requirements of From 10-Q and therefore does not
include all the disclosures normally required by generally accepted
accounting principles, or those normally made in the Corporation's
annual 10-KSB filing.  The reader of these consolidated interim
financial statements may wish to refer to the Corporation's annual
report or Form 10-KSB for the period ended December 31, 1996, filed
with the Securities and Exchange Commission.


                                   6

<PAGE>


Item 2.  First Keystone Corporation Management's Discussion and
         Analysis of Financial Condition and Results of Operation 
         as of March 31, 1997



FINANCIAL CONDITION

     Total assets of the Corporation increased by $7,794,000 from
December 31, 1996, to March 31, 1997, to a level of $250,351,000.  
The increase in total assets was largely a result of total deposits
increasing to $203,269,000, up $4,723,000 from December 31, 1996, and
long-term borrowings increasing by $3,000,000.

     The increase in deposits and borrowings were used principally to
fund an increase in loans and an increase in interest-bearing deposits
with banks.  Loans, net of unearned income increased $3,968,000 from
year-end 1996 to March 31, 1997.  Interest bearing deposits with banks
increased by $4,838,000 as additional funds were kept short-term in
anticipation of possible interest rate increases.


ALLOWANCE FOR LOAN LOSSES

     Management performs a quarterly analysis to determine the
adequacy of the allowance for loan losses.  The methodology in
determining adequacy incorporates specific and general allocations
together with a risk/loss analysis on various segments of the
portfolio according to an internal loan review process.  Management
maintains its loan review and loan classification standards consistent
with those of its regulatory supervisory authority.  Management feels,
considering the conservative portfolio composition, which is largely
composed of small retail loans (mortgages and installments) with
minimal classified assets, low delinquencies, and favorable loss
history, that the allowance for loan loss is adequate to cover
foreseeable future losses.

     Any loans classified for regulatory purposes as loss, doubtful,
substandard, or special mention that have not been disclosed under
Industry Guide 3 do not (i) represent or result from trends or
uncertainties which management reasonably expects will materially
impact future operating results, liquidity, or capital resources, or
(ii) represent material credits about which management is aware of any
information which causes management to have serious doubts as to the
ability of such borrowers to comply with the loan repayment terms.  

     The company was required to adopt Financial Accounting Standards
Board Statement No. 114, "Accounting by Creditors for Impairment of a
Loan" - Refer to Note 5 above for details.


LIQUIDITY

     The liquidity position of the Corporation remains adequate to
meet customer loan demand and deposit fluctuation.  Managing liquidity
remains an important segment of asset liability management.  Our
overall liquidity position is maintained by an active asset liability
management committee.  Liquidity is achieved through steady increases
in core deposits, our investment portfolio, our loan portfolio through
loan payments and payoffs, and our access to borrowed funds.


                                   7

<PAGE>


RESULTS OF OPERATIONS

     Net income for the first quarter or the three months ended March
31, 1997, was $1,123,000, an increase of 16.0% over the first quarter
of 1996.  The increase is largely a result of net interest income
increasing $247,000, or 11.6% over 1996 and total other income
increasing $51,000, or 21.3% over 1996.

     As indicated, the increase in net income resulted from
improvements in several areas.  The net interest income increase was
due to our relatively stable net interest margin which increased in
1996 over prior years.  Total other income increased $51,000 largely
from the additional fiduciary activities income generated by our trust
department.  Operating expenses were controlled during the first
quarter of 1997, with our provision for loan losses increasing $25,000
and total other expenses increasing $60,000.  Our income before income
taxes increased to $1,397,000 in 1997, an increase of 18% over 1996. 
Finally, continued effective tax planning helps to enhance
profitability.  Our effective tax rate for the first quarter of 1997
was 19.6% as compared to 18.2% in 1996.

     Net income per weighted share outstanding was $1.26 for the three
months ended March 31, 1997, as compared to $1.09 in 1996.  Cash
dividends per share increased to $.35 as of March 31, 1997, as
compared to $.31 in March 1996.  We remain committed to increase net
interest income through the generation of quality loans.  Continued
loan growth, together with manageable loan losses and cost control
over other expenses, will provide the foundation for strong net income
results throughout 1997.


                                   8


<PAGE>


                      PART II - OTHER INFORMATION

     Item 1.  Legal Proceedings

              None.


     Item 2.  Changes in Securities

              None.


     Item 3.  Defaults Upon Senior Securities

              None.


     Item 4.  Submission of Matters to a Vote of Security Holders

              Annual Meeting of Shareholders of First Keystone
              Corporation held on Tuesday, April 15, 1997, at 9:00
              a.m.


<TABLE>
<CAPTION>

                                                     Votes        Votes
Directors Elected                  Votes For        Against      Withheld

<S>                                 <C>              <C>            <C>
Budd L. Beyer                       754,543          6,453          0
Frederick E. Crispin, Jr.           754,543          6,453          0
Robert J. Wise                      754,514          6,482          0


<CAPTION>

                                                   Broker
Directors Elected                 Abstentions     Non-Votes

<S>                                  <C>             <C>
Budd L. Beyer                        0               0
Frederick E. Crispin, Jr.            0               0
Robert J. Wise                       0               0

</TABLE>


Directors Continuing:

John Arndt, term expires in 1998
J. Gerald Bazewicz, term expires in 1998
Robert E. Bull, term expires in 1998
John L. Coates, term expires in 1999
Dudley P. Cooley, term expires in 1999
Stanley E. Oberrender, term expires in 1999
F. Stuart Straub, term expires in 1998

Matters Voted Upon:

Selection of J. H. Williams & Co., as auditors for the
Corporation.
                Votes For - 760,537
                Votes Against - 48
                Votes Withheld - 0
                Abstentions - 411
                Broker Non-Votes - 0


     Item 5.  Other Information

              10% Stock Dividend - refer to Consolidated Notes to
              Financial Statements Note 6 appearing on page 5 of
              this Form 10-Q.


                                   9

<PAGE>


     Item 6.  Exhibits and Reports on Form 8-K

              (a)  Exhibits required by Item 601 Regulation S-K


Exhibit Number         Description of Exhibit

    3(i)               Articles of Incorporation, as amended
                       (Incorporated by reference to Exhibit 3(i) to
                       Registrant's Annual Report of Form 10-KSB for
                       the year ended December 31, 1996.

    3(ii)              Bylaws, as amended (Incorporated by reference
                       to Exhibit 3(ii) to Registrant's Annual Report
                       on Form 10-KSB for the year ended 
                       December 31, 1996.

    10                 Material Contracts

    11                 Statement RE: Computation of Earnings Per
                          Share.

    27                        Financial Data Schedule.


           (b)  The Registrant has filed no reports on Form 8-K 
                for this quarter.


                                  10


<PAGE>


                      FIRST KEYSTONE CORPORATION

                              SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly cause this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                              FIRST KEYSTONE CORPORATION
                              Registrant


May 12, 1997                  /s/ J. Gerald Bazewicz
                              J. Gerald Bazewicz
                              President and 
                              Chief Executive Officer
                              (Principal Executive Officer)



May 12, 1997                  /s/ David R. Saracino
                              David R. Saracino
                              Treasurer/Assistant Secretary
                              (Principal Accounting Officer)


                                  11


<PAGE>


                           INDEX TO EXHIBITS

Exhibit       Description                                      Page

  10          Material Contracts
                  Profit Sharing Plan Summary                   13
                  Deferred Compensation                         14
                      Other Executive Benefits
                      (Incorporated by reference to
                       Exhibit 99 (Page 9) of the 
                       Corporation's Annual Report on 
                       Form 10-KSB for the year ended 
                       December 31, 1996)
                  Management Incentive Compensation Plan        15
                       

  11          Compensation of Earning Per Share                 16

  27          Financial Data Schedule


                                  12